18 year old with £100 per month to invest

Afraid_of_Kittens

What advice would you give an 18 year old with £100 per month surplus income to invest?

At the moment they have £25 per week going into a High Risk NEST pension.
They want to buy £25 per month of Premium Bonds.
Put £25 per month into a HBOS Share Building account.
Put £25 per month into a HBOS ISA Investor.
Put £25 per month into Royal Mint Signature Gold account.

Thoughts on any better long term products out there appreciated. Any downsides on the products they want to invest in?

Alice_Holt

If a long-term plan is to buy a property, then a LISA might be a sensible addition to that list.

Rather depends on what the 18 year old has planned - uni? apprenticeship? car purchase? And any other financial resources available to them?

In general terms I'd be inclined to use it to build up an emergency fund / savings cushion. So, I'd be looking at regular savings accounts offering 5% (FD, HSBC, M&S).
However, at that age investing in yourself by gaining valuable vocational qualifications is likely to provide the best return.

Although starting a pension is admirable, at 18 it's locking that money away for c.40 yrs. More pressing financial needs may surface before then. So, unless that £25 attracts an employer contribution, and tax relief (in which case it's very sensible), I'd tend to defer that bit until later.

Flobberchops

My first reaction is that that's a very eclectic set of investments for an 18 year old. But hey, who am I to say they're wrong? If I had invested in gold in my teens I would be laughing all the way to the bank now.


Pension - great, never to early to start.
Premium Bonds - why the heck not, it's safe as houses and you may get a pleasant surprise now and again.
HBOS - Google didn't immediately reveal the difference between the two, am I right in thinking these are both varieties of stocks and shares accounts?
Royal Mint - a .33% buy premium, .5% +VAT storage fee and 1% sell premium make it expensive to buy, expensive to hold and expensive to sell. Not bad if you foresee a big upswing in gold prices in 10+ years, but as a dabbler you may struggle to break even. Why not put the £25 a month into a Regular Saver, and each year on maturity buy a physical Sovereign?


Other options include opening a HTB ISA (get in before November!), a LISA, or chucking £25 a month into P2P if you like risky investments.

enthusiasticsaver

What costs are involved in those investments? At just £25 a month to each of those investments I hesitate to say it is worth diversifying that far when the costs could be quite significant.

I can understand investing into a pension but at 18 what are his immediate objectives? It seems to me that if he is investing for his future he should look first at emergency savings and pension but maybe leave off other investing until he has more money spare or just chooses a multi asset index tracker fund rather than investing in HBOS share builder and HBOS Isa investor. What are the charges for each deal?

Edi81

The share builder is a product from Halifax Share Dealing (not the same as Halifax Bank).
It allows you to make investments in either shares or funds at set points in the month for a £2 dealing fee.
So, what are you buying each month?

AnotherJoe

Need to know more about the 18 year old.what is their intent for this money ?
Also, Aside the wisdom on "investing" in gold, the chosen route is a very expensive way of doing it.

Afraid_of_Kittens

Flobberchops wrote: »

Royal Mint - a .33% buy premium, .5% +VAT storage fee and 1% sell premium make it expensive to buy, expensive to hold and expensive to sell. Not bad if you foresee a big upswing in gold prices in 10+ years, but as a dabbler you may struggle to break even. Why not put the £25 a month into a Regular Saver, and each year on maturity buy a physical Sovereign?

I may suggest this - it is a family tradition for them to hold so much in gold and use it like a credit card when they need cash by porning it.

Afraid_of_Kittens

AnotherJoe wrote: »

Need to know more about the 18 year old.what is their intent for this money ?
Also, Aside the wisdom on "investing" in gold, the chosen route since to be a very expensive way of doing it.

They just want to have a certain amount of spare money put to one side as savings that will grow. Some of it will be easy access such as the gold and premium bonds that they can sell at short notice. The share building accounts are for them to accumulate a large lump sum for them to cash in 3 or 4 years down the line so they can invest a proper lump sum in a proper share dealing account. They dont have a few grand spare at the moment to go straight into share dealing.

The bank of mum and dad will be helping with a deposit when they buy their first home. I will be suggesting a Help to Buy ISA as these end in November. They are already in a good job earning £25k + per year.

quirkydeptless

Afraid_of_Kittens wrote: »

I may suggest this - it is a family tradition for them to hold so much in gold and use it like a credit card when they need cash by porning it.

:eek: cough, cough ... pawn ... cough cough

Afraid_of_Kittens

quirkydeptless wrote: »

:eek: cough, cough ... pawn ... cough cough

Freudian slip....:p

ViolaLass

Does this 18 year old have an emergency fund and anything they want to save up for sooner than retirement?

Edited to add: the last few posts hadn't appeared when I posted.